HMRC MTD for Income Tax Process
Introduction to HMRC MTD for Income Tax Process
The MTD for Income Tax feature went live in March 2017.
To comply with this process, customers are required to keep a digital record of their Income and Expenditure transactions and to submit a summary of this data electronically using an App like the Rhino Small Business App that is integrated to the HMRC MTD platform.
Recording your Income Electronically
You can use the Rhino Small Business App to create invoices and credit notes. Alternatively, you can continue to use products like Microsoft Word to create the Invoice Document but you will need to record the transaction in Rhino and attached the Microsoft Word File to the Invoice.
If you manage a business like a restaurant that has a high volume of transactions, you can record a Receipt and attach a file containing a list of the detailed sales transactions.
Recording your Expenditure Electronically
You can use the Rhino Small Business App to record your Expense transactions. Using the App on your phone to take a photo of the Expense Receipts means that you no longer need to retain paper copies of the Receipts.
The MTD for Income Tax Submission Process
Once you have recorded your transactions, you will need to do the following: –
- Connect to the MTD Platform (Authentication Process)
Connecting the Rhino Small Business App to the MTD platform is a one-off exercise and will take approximately one minute to complete. This process grants the Rhino Small Business App the permission to update the MTD platform on your behalf thereby avoiding the need to log the HMRC Web Site.
- Provide Quarterly Updates
Each time you go into the Income Tax Submission Process, the Rhino App will take a few seconds to download the latest set of ‘Income Tax Obligation Dates’ that have been made available by HMRC.
- Submitting your Data to HMRC
Rhino will summarise the Income and Expense Data and submit a summary of this data to HMRC. Once submitted, the detailed transactions that are associated with the Submission are locked. This lock maintains an audit connecting the detailed transaction to the summary data that you submitted. You will be able to enter new Invoices and Expenses for a period that you have already submitted.
- Finalise your Tax Affairs
You can use the Rhino app to declare that you have finalised your Income Tax Submission for the Year. This MTD Income process is currently voluntary but it does mean that you will no longer need to complete the online Self-Assessment Tax Return.